Over the years I’ve gone out of my way to be as honest and truthful as possible when writing about my student loan repayment. If you’ve been reading this blog for a while, then you know that I do not keep quiet in my praise of what “works” and I am equally as vocal about what is broken in the student loan industry. I’m a fan of the United States Department of Education and the way that they operate their student loan shop. Granted, I wasn’t happy when they sold my loan to the Missouri Higher Education Loan Authority without my approval, but that’s part of the fine print. In the grand scheme of things, the USED has been great to work with over the years.
On the flip side, the New Jersey Higher Education Student Assistance Authority was a miserable service provider. In almost every aspect of the borrower-lender relationship, the NJHESAA failed. And according to the comments on this blog, the NJHESAA failed many other borrowers, too.
As I begin to wind down my student loan repayments, today I’d like to bring to you the story of another college graduate saddled with a large student loan debt. In particular, I’d like to bring you the story of Jennifer and the $27,000 that she owes to NJHESAA. The story below is the exchange that Jennifer and I had over e-mail and please understand that names have been changed to protect the innocent (because I know there are dubious folks from quasi-state agencies who troll this blog).
Jennifer’s First E-Mail to Me:
I have just spent a good hour or two reading some of your blogs about your student loan journey. I myself have a loan through HESAA that frustrates me to no end and I was wondering if you could give me any tips? I currently owe them about 27,000 and my minimum payment is 266.00 a month. I have other student loans but they are all federal and as you know with a much lower interest rate.
So as for my HESAA loan, I have been paying $400 a month on this loan and I pay a little extra on my other student loans each month as well. I pay the most on my HESAA loan each month because it has the highest balance and interest rate. Is this a good approach or should I be doing the snow ball affect you spoke of in one of your blogs?
I pay my HESAA loan online. Do they still have a 2.5% charge that you have talked about?! If that’s the case maybe I should mail them a check?
With my other loans, I am able to see my original loan amount and payments remaining but HESAA doesn’t show this?! I have called them to have them send me something stating my original loan amount and how many payments I have remaining and they can’t seem to do this?! Also no matter how much I overpay on this loan (I have tried the bi-weekly method of paying this loan) I still owe the $266.00 on the 12th of each month.
I just know you have experience with this horrible company and was wondering if you could give me any tips?!
I appreciate your time and your blog is inspiring!
My Response to Jennifer:
Thanks for reading about my journey with the student loans and I’m glad that you find my story inspiring. I’m currently at about $3 thousand and my projections show that I’ll be fully repaid in about 6 weeks. It’s pretty exciting.
The absolute worst part of my journey was with the NJHESAA. What frustrated me the most about them (and this may be useful for you to understand in your dealings with them) is that they automatically default to the position that the customer is wrong. So if you call them and ask any question about any loan that you have with them, be prepared to be greeted with arrogance, frustration (on their end because you’re so “stupid” in their eyes), and a ready willingness to tell you false information just to get you off of the phone. Quite frankly, their arrogance is worthy of a state investigation as a crime against any of their borrowers. And what I always got a kick out of when I called them was that here I am – a guy with a Bachelor’s Degree with three minors, a Graduate Certificate, a Masters Degree, and a healthy job in high-level finance – and they would act like I was the biggest moron in the world.
The NJHESAA is truly an astounding display of how unqualified people can rise up the ranks of a quasi-governmental agency. Shameful.
As for your situation, I always recommend the snowball approach, but it depends on your other loans. For example, if you have a loan with the federal government and the balance is very low (i.e. something that you can pay off in a matter of 4 – 6 months using the snowball effect), then pay that loan off first. Financial planners would disagree and say to always attack the highest rate loan first, but I think there is something to be said for moral victories. Retiring a student loan – even if the balance is low – gives you a great feeling of accomplishment. Plus, what the financial planners never really talk about (because it’s hard to explain and for a person to financially model in their minds) is the fact that even if you’re paying a higher interest rate on a loan, you’re not really realizing that interest rate in full if you pay it off early. In other words, if you focus on eliminating a lower balance, lower interest rate federal loan and then focus on retiring a higher interest rate, higher balance NJHESAA loan, well you’re not really paying the full interest rate on the NJHESAA loan because you’re going to pay it off early. True, you’ll be paying the full interest rate for the time that the loan is outstanding, but by decreasing the overall amount of time that you spend repaying the loan (by making additional principal payments), your effective interest rate falls.
I once found a good calculator online that explained this a lot better than I can. Of course, I lost that link. If I find it again, I’ll send it over.
I’m not sure if NJHESAA still has the fee for online payments. Once I repaid my loan, I pushed that miserable company out of my life for good. Although I have to admit, I don’t think that they’re done with me yet. I have a mailing list for my blog where folks can sign-up to receive a quarterly list of some of the better entries from the last quarter. Guess who signed up for that mailing list? That’s right – the NJHESAA (and it was their PR person who signed up, too). Probably has something to do with the fact that when you Google NJHESAA, my blog tends to be towards the top of the list…
In general, my advice to anyone repaying a large student loan is to learn to really get in touch with your wants, your needs, and your finances. By this I mean that I was only able to drastically reduce my student loans by living an extremely frugal lifestyle. After I graduated, when my friends would be in the area and wanted to go to the bar – I said no. I couldn’t afford to spend the money. When my buddies made a trip to AC and they wanted me to come along – I said no. My big gamble in life was taking on the student loans (which paid off; and now I go to AC once or twice a year). When I found myself in relationships where the girl I was dating was fixated on a lifestyle of consumption and acquiring material things, I left those relationships. Sure, sometimes it sucks to leave someone that you think you could really care about, but you must consider the bigger picture. If you date someone today who gets upset that you can’t go out to dinner a few nights each week or who wants to move in with you to live in a bigger, more expensive place or town, then what’s life going to be like when you’re debt free? Is that person going to demand more consumption and more keeping up with the Joneses?
Some folks think that is a bleak outlook on life, but I argue it’s the exact opposite. Think of how many people are divorced because of “irreconcilable difference.” That’s exactly what’s irreconcilable – constantly spending money without being smart or saving!
And the final bit of advice (which you probably picked up from my blog anyway), is to work your tail off. I spent my 20s and now the first two years of my 30s working around the clock. Nearly everyday would bring a new deadline to meet. Life has become incredibly crazy, but building this type of work ethic has opened two important doors for me. First, it allowed me to really increase my income to where I could make the over payments. Second, it gave me access to new and better money-making opportunities. A quick example is my work teaching at the local college. Because I was an adjunct there (teaching only 2 – 3 courses each year), the door opened up for me to work at an online college. The pay is much better and the hours are much easier with the online college and that door wouldn’t have opened if I didn’t take the opportunity at the local college – and I wouldn’t have been able to work the local college opportunity if I was out drinking and carousing with the guys.
Everything fits together like a weird, but awesome puzzle!
Before I hit send – a question for you: Do you mind if I use this e-mail exchange on the blog? Names would be changed to protect identities, but I think it’s a good discussion about student loans. Let me know.
Jennifer’s Final Response to Me:
Thank you so much for your reply 🙂 I wasn’t sure if you were going to get my email or not. That’s really funny about NJHESAA subscribing to your blog. They are such scam artists it’s not even funny! I just received an email from them yesterday actually. After I called them a week or two ago and asked for something stating my original loan balance and how many payments were remaining I received a billing statement in the mail (stating nothing of what I had asked for). So I tried through email to get a response. They emailed me back saying to refer back to my original loan disclosure(which I obviously don’t have or I wouldn’t be asking them for this information) and informed me they were unable to give me a duplicate copy of the loan disclosure! This company is a joke and I can’t wait to be done with them! This is one of the main reasons I pay them more than my other loan companies. The other ones I am able to obtain any information I need without a problem…not NJHESAA!
Of course you are free to use our correspondence. I am sure there are plenty of others in the same boat as me wondering the same questions 🙂
Thank you so much for your time!
I hope you enjoyed this interaction between Jennifer and I regarding our student loans. The moral of the story here is that you are probably not alone in your frustration with your student loan servicer. In fact, you should be intelligently loud and make some noise about your student loan servicer if they are not meeting your needs or treating you horribly. And if all else fails, feel free to start your path to justice by leaving a comment on blogs like this one. You never know where it might lead you!